Bessie Wants to Calculate the Accounting and Economic Profits on Her

question 100

Essay

Bessie wants to calculate the accounting and economic profits on her cattle farm in Nebraska.She pays $30,000 per year for the cost of raising cattle, $80,000 in wages, and $20,000 in insurance.she forgoes $30,000 per year that she could make as a teacher.If her total revenue equals
$140,000, that means her accounting profit is ________ and her economic profit is _.
A.$10,000; -$20,000
B.$30,000; -$30,000
C.-$10,000; -$10,000
D.$60,000; $30,000

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Definitions:

Operating Costs

Expenses associated with the day-to-day functions of a business, excluding costs related to production.

Annual Cost Savings

The reduction in costs achieved during a year due to various savings measures or efficiencies.

Discount Factor

A multiplier used in discounted cash flow (DCF) analyses to determine the present value of future cash flows, reflecting the time value of money.

Proposed Project

An outlined plan or proposal for undertaking a specific activity or achieving a goal that requires approval or funding.